Lilly's drug that would not die gets another short lease on life

With an October 29 date set for yet another data release about Lilly's experimental Alzheimer's drug solanezumab, the underperforming drug's status as a pipeline drug, as opposed to a graveyard one, has been extended.

The latest data drop came Monday, as the company announced that when it pooled data in a secondary analysis of its Phase III results, things weren't all that bad -- the results showed that the drug slowed a statistically significant slowing of cognitive function among patients with mild Alzheimer's disease. The company teased these results in August, but provided more detail on Monday, stating that the drug "represented a 34% reduction in [cognitive] decline."

The bright-side focus is a walk back from the primary Phase III measurement, which was the key message in August, which looked for an impact on both cognitive and global function. Slowing decline is just one component of what is considered a critical combination for the irreversible disease. The results are also applicable and encouraging for an elusive patient population, because patients have already passed through the earlier stages of the disease, which are often missed by patients, caregivers and physicians, since problems like memory issues are common among the age group, but perhaps slightly more common or severe among Alzheimer's patients. The patient group that may benefit from Lilly's experimental drug include patients who have bypassed these earlier stages. The National Institutes of Health's National Institutes on Aging describes “mild” Alzheimer's patients whose mental decline is enough to cause them to get lost, have difficulty handling money, struggling with daily tasks and using poor judgment. This is in addition to mood and personality changes that can occur by this stage.

Despite frontloading the drug with low expectations, analysts were cheered by Monday's news. Three days before the most recent results, Credit Suisse analyst Catherine Arnold noted that Lilly's August 24 failure announcement only served to pique interest, while also noting that the “starting point was zero,” in terms of expectations that Lilly was going to be able to deliver any positive news about the drug. In this case, the good news was that using a new optic – pooling results among test groups, focusing on mild patients, and accepting improvement on one data point instead of two – meant that the drug could still have market potential.

In contrast, the Pfizer-Johnson & Johnson-Elan drug, Bapinezumab has been in stealth mode. Like Lilly, it had low expectations, which it met with its July Phase III results announcement. Jefferies analyst Corey Davis noted in his Tuesday research note that the companies revealed “unambiguous lack of any clinical signal” for its Phase III tests during its Monday presentation at the American Neurological Association conference in Boston. Davis wrote that even though he went into the ANA conference with no expectations, he, and others “were looking for any evidence to suggest the drug may work better in less sick patients,” only to walk away discouraged. “In our opinion there was absolutely no evidence,” he wrote.

Relatively bullish on Lilly's solanezumab, Davis, like other analysts, expressed tempered optimism about Lilly's contender, and noted that the company will probably have to come up with another round of tests before determining if the drug has a significant patient payoff.

Lilly will meet with regulators about the drug's next steps. Bernstein analyst Tim Anderson forecast a 2016 approval date, assuming more tests. Anderson wrote Monday that solanezumab could be a transformative pipeline product for Lilly, but its potential to fail is about 60%.